What Is Limited Liability Insurance? MHN Property Management Explains

As a landlord, you must always be on guard regarding your property. Protecting what you own helps ensure that you won't lose out financially. 

 

However, some tenants may not be as careful as they should be while living in your property, which can lead to substantial damages and the need for costly maintenance. In some cases, repairs could cost more than the security deposit, which is only designed to cover small issues. 

 

So, what happens if a significant issue occurs? It's important that you are aware of your options and how you are protected.

 

At MHN Property Management, we take the extra step to ensure landlords have added protection against damages. We stay one step ahead of potential problems by putting safety measures in place with your tenants. One way we do that is by requiring renters to have limited liability insurance. 

 

What is limited liability insurance? How is it different than renters insurance? Today we explain it all!

 

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What is Renters Insurance, and Is It Required?

Some property owners think renters insurance will protect them from issues taking place in a rental property during the lease. However, renters insurance is different from landlord insurance, and it's not mandatory in Texas. 

 

The three primary protections renters insurance offers are as follows:

  • Protection for a tenant's personal belongings. This includes their furniture, clothing, jewelry, and so on.
  • Excludes the tenant from liability if someone gets injured in the home.
  • Covers damage to the property that occurs to an adjoining residence or someone else's personal assets due to the accident.

As you can see, a renters insurance policy only protects the tenant. This type of coverage does not offer any protection for property owners. 

 

In addition, while it is certainly helpful for tenants to have this coverage for their financial security, the renters insurance Texas offers can't be forced on tenants here.

 

What is Limited Liability Insurance?

So how can property owners encourage renters to get the protection they need? A San Antonio property management team like MHN Property Management can require renters to obtain limited liability insurance. This type of insurance is more applicable for landlords and will help them deal with tenants and property damage.

 

Limited liability companies can provide coverage for those property damages that may result from a tenant's negligence. The limited liability policy can also cover an accident a tenant may have on the property that results in damage to the rental property.

 

Limited liability property insurance covers the following types of items:

  • Structural property damage, such as damage to the flooring, walls, roof, etc.
  • Internal damage to property, such as damage to appliances. It could also cover damage to carpeting in the event of a water leak due to negligence.
  • Property damage to other structures on the property, such as sheds, buildings, garages, etc.

In addition to coverage for physical damages, limited liability insurance also covers injuries to others that may occur because of the tenant's negligence. For example, if the tenant has a dog that causes bodily injury to someone else while on the property, the insurance may cover the liabilities.

 

Why Is Limited Liability Insurance Important?

As a landlord, you never know what might occur in your home. Even with robust tenant screening, someone could be careless and negligent, resulting in accidental damages. If that happens, you need to be sure that you are not left with the bill. 

 

Limited liability coverage can protect you from these types of accidents.

 

Enforcing limited liability insurance is a vital step because many tenants won't get it otherwise. Some tenants may intend to secure the insurance but forget to do it. Maybe they put it off, and then something happens, and the damage is done. Instead, it's better to be sure they are signed up for a limited liability plan for your protection.

 

Most states require this type of coverage as part of their renters policy. However, the state of Texas doesn't require it, and it's likely that coverage won't be adequate anyway. If they have both insurances, they will have their belongings protected too.

 

Request or demand for payment under the house insurance policyHow We Help Property Owners Protect Their Rental Properties

Since 2019, our team has required that all renters obtain limited liability insurance. In addition, we request and recommend that renters also keep a current Texas renters insurance policy (even though Texas won't allow us to require it), explaining to residents that it's in their best interest to have this type of coverage. 

 

However, not only do we require limited liability insurance, we facilitate most of the process. With this type of policy, when something happens to a rental property — like those rare Texas freezes that can cause pipes to burst — a property owner has a resource to make a claim and receive reimbursement for repairs. 

 

Learn More About "What Is Limited Liability Insurance?" With MHN Property Management

You can take comfort in knowing that our team at MHN Property Management can help you with all the details of securing limited liability insurance from your tenants. If something goes wrong in the property and the tenant's belongings are damaged, we want to make sure you are protected, too.  

 

Reach out to MHN Property Management today for more details about how we can protect your assets.

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